1. Robert Burch

    I read your blog “B is for Bifurcate” and have a question. You stated one cannot bifurcate a mortgage on a personal residence. What if the total value of a first mortgage plus the amount of a second mortgage is greater than the value of the house. Can the second mortgage be bifurcated into secured up to the value of the house, and then unsecured for the portion in excess of the house value? Example:first mortgage $75.00; second mortgage $50.00; total value of the house $100.00. First mortgage of $75.00 fully secured. 2nd mortgage $25.00 secured and $25.00 unsecured?

    • Melinda Dionne, Esq.

      Sorry, I approved your comment bud did not see the question included. The answer is no, except as follows: if the 2nd mortgage has any level of security, even one dollar, then it cannot be stripped off. It is a little different from bifurcation, however, because you can actually remove a lien that is totally unsecured on real estate. So, if the first is $100,000 and the value of the real estate is $100,0001 or more, then a second mortgage would be totally unsecured. As such, it would be subject to being stripped off through a chapter 13 case. But, it is not a bifurcation and there cannot be any value to attach the junior lien for a bankruptcy court to be able to enter an order on it. It generally would require a 2 step process: First, a Motion to Value to get the court to determine that the claim is unsecured; and Second, an adversary proceeding to actually strip the mortgage or lien off of the real estate.